has filed the case<\/a>.<\/p>\nThe bulk of the \u00a31.3bn claim is \u00a31.1bn of trading losses that Carillion posted, which the receiver is now trying to recover. They have claimed that if KPMG\u2019s auditors had done their job properly, problems on construction contracts would have been identified swiftly and could have been dealt with, instead of swelling to the \u00a31.1bn in provisions and writedowns that the contractor made in June and September 2017.<\/p>\n
Around \u00a3210m is being claimed to recoup dividends the contractor paid out between 2014 and 2016. A further \u00a331m in advisory fees that Carillion paid are also included in the claim.<\/p>\n
The case alleges that Carillion did not correctly account for its losses on major, long-term construction contracts in the 2014, 2015 or 2016 accounts, and crucially that KPMG failed to identify them.<\/p>\n
It is alleged that despite knowing there were problems on the jobs, including the Aberdeen Western Peripheral Route, the redevelopment of the Battersea Power Station site and the Royal Liverpool Hospital, KPMG accepted managements\u2019 explanations for inflated revenue and how they would recover losses.<\/p>\n
As part of its filing, the receiver has carried out an extensive analysis of 20 key projects, which reveal the wide divergence between Carillion\u2019s performance claims and reality.<\/p>\n
On the Battersea Power Station project, for example, Carillion had claimed it had made around \u00a37m profit on the job between 2014-16. But the receiver\u2019s assessment showed it had actually incurred a \u00a3166m loss.<\/p>\n
Carillion had signed a \u00a3443m lump-sum contract with zero margin in 2013 to design and build 142,000 square metres of mixed-use accommodation, including 866 apartments, retail units, a theatre and other amenities. Within one year it was more than six months behind schedule.<\/p>\n
The Official Receiver said in its claim that any “reasonably competent” auditor would have “identified that the contract had been bid on a zero margin basis and challenged, in light of this, whether it could now be right that the contract was forecast to make a profit”.<\/p>\n
It claimed KPMG accepted \u201cmanagement adjustments”, which took a more optimistic view of the job and the ability to turn it around. They also signed off management expectation that they could recover around \u00a341m on the job via claims against the client, despite no evidence that the claims had been made or were likely to be successful.<\/p>\n
However, KPMG said it was not to blame for the company’s collapse.<\/p>\n
“Responsibility for the failure of Carillion lies solely with the company\u2019s board and management, who set the strategy and ran the business,” the company said in a statement.<\/p>\n
A full trial is expected to start in 2024, unless a settlement is reached first.<\/p>\n","protected":false},"excerpt":{"rendered":"
KPMG has hit back at the \u00a31.3bn lawsuit it has been landed with as details of the case are revealed. The accountant formally acknowledged the claim on Thursday afternoon, but said in a statement that it was without merit and that they would \u201crobustly defend\u201d the case. The Official Receiver, which is trying to maximize …<\/p>\n","protected":false},"author":26091,"featured_media":379878,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false},"categories":[531],"tags":[],"yoast_head":"\n